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Hawthorn Ltd Income Statement for the period ended 31 August 2016

 

Hawthorn Ltd
Income Statement for the period ended 31 August 2016 £
Sales  2,945,000
Less: cost of sale
Opening stock  384,000
Purchases  1,375,000
Closing stock  (396,000)  (1,363,000)
Gross Profit  1,582,000
Other Operating Income  27,600
 1,609,600
Less: Operating Expenses
Administration (Note 1)  (661,800)
Distribution Note 2)  (320,080)
Marketing  (279,300)
Reduction in allowance for receivables (Note 3)  5,800
Audit Fee  (7,000)  (1,262,380)
Operating Profit  347,220
Interest expense  (13,500)
Tax expense  (67,544)
Net profit  266,176
Note 1
Admin Balance brought forward  217,000
Depreciation – equipment (307,000*0.1)  30,700
Energy expense (16,300 + 2,700) * 0.7  13,300
Salaries (534,000*0.7)  373,800
Rent (24500+5000-2500)  27,000
 661,800
Note 2
Distribution Balance brought forward  130,100
Depreciation – M.V (235,000+23,000-137,600)*0.2  24,080
Energy expense (16,300 + 2,700) * 0.3  5,700
Salaries (534,000*0.3)  160,200
 320,080
Note 3
Receivables Balance  436,500
Less: written off  (6,500)
 430,000
Allowance at 4%  17,200
Previous allowance  23,000
Reduction  5,800

 

Hawthorn Ltd
Statement of Financial Position as at 31 August 2016 £
 Non Current Assets
 Equipment at cost  307,000
 Accumulated depreciation (195,000+30,700)  (225,700)  81,300
 Motor Vehicle at Cost  258,000
 Accumulated depreciation (137,600+24,080)  (161,680)  96,320
 177,620
 Current Assets
 Non-current investments  12,500
 Stock  396,000
 Receivables  412,800
 Cash  354,200
 Prepaid expense  4,000  1,179,500
 Total Assets  1,357,120
 Equity and Liabilities
 Ordinary £1 shares  175,000
 Share premium  75,000
 Retained earnings (From SOCE)  492,976
 742,976
 Non-current liabilities
 6% debentures  225,000
 Current liabilities
 Energy payable  2,700
 Trade payables  298,400
 Tax payable  67,544
 Interest payable  13,500
 Audit fee payable  7,000  389,144
 1,357,120

 

Hawthorn Ltd
Statement of Changes in Equity for the period ended 31 August 2016 £
 Retained earnings at 1 September 2015  244,300
Profit for the year  266,176
 Dividends Paid  (17,500)
 492,976

 

Citron plc
Ordinary dividend paid during the year ended 31 December 2016
Retained earnings @ 31 December 2015  157,478
Profit for the year (302,365-15,000-70,470)  216,895
Retained earnings @ 31 December 2016  289,373
Dividend Paid  85,000
Citron plc
Statement of Cash Flows for the year ended 31 December 2016
Profit before taxation  302,365
Add: Depreciation (Note 1)  147,102
Add: Loss on disposal (Note 2)  5,000
 454,467
Less Tax paid (Note 3)  (68,624)
Changes in Woking Capital
Increase in Inventory (385,245 – 299,993)  (85,252)
Increase in receivables (273,669 – 194,625)  (79,044)
Increase in payables (234,596 – 138,443)  96,153
 (68,143)
Cash generated from operations  317,700
Cash flow from investing activities
Additions in Property, plant and equipment (Note 4)  (309,500)
Disposal proceeds  55,000
 (254,500)
Cash flow from financing activities
Equity issued (60,000*1.5)  90,000
Loan added  80,000
Interest paid  (15,000)
Dividends paid  (85,000)
 70,000
Net Cash flow during the year  133,200
Cash and Cash Equivalents at the start of the year (o/d)  (120,352)
Cash and Cash Equivalents at the end of the year  12,848
Note 1
Accumulated depreciation @ 31 December 2015  214,110
Depreciation on asset sold  20,000
Accumulated depreciation @ 31 December 2016  341,212
Depreciation for the year  147,102
Note 2
Equipment at NBV  60,000
Disposal proceeds  55,000
Loss on disposal  (5,000)
Note 3
Tax payable @ 31 December 2015  95,985
Tax expense for the year  70,470
Tax payable @ 31 December 2016  97,831
Tax paid  68,624
Note 4
Property, plant and equipment at cost @ 31 December 2015  411,750
Disposals at cost  80,000
Property, plant and equipment at cost @ 31 December 2016  641,250
Additons during the year  309,500

 

 31 December 2016  31 December 2015
Current Assets 671,762 494,618
Current Liabilities 332,427 354,780
Inventory 385,245 299,993
Current Ratio  2.02  1.39
Acid Test Ratio  0.86  0.55
Citron Plc has substantially improved on the liquidity and solvency position over the year. At the end of 2015 it only had £1.39 worth of liquid assets to repay £1 worth of current liabilities, however, the liquidity poistion significantly improved the next year where it had £2.02 worth of current assets for every £1 of short term obligations.The primary driver for growth in cash flows has been the trading performance during the year. While it can be argued that the working capital management was not entirely impressive during the year, the movements in inventory and debtor balances make sense as greater investment in debtors and stocks is required when the company aspires to increase sales. The growth in payable balances is greater than thee movement in inventory implying that good credit terms have been negotaiated with the suppliers.Furthermore, substantial investments in PPE have been made which appear natural given the increase in sale as the company should require suffficient sustenance capex to meet the volumetric needs for the upcomming year. The growth in cash flows was further attributable to the additional financing obtained by the company with almost equal financing obtained through the debt and equity medium. All in all, Citron plc was quite successful from converting a net overdraft position in 2015 to a positive cash flow in 2016.